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Spillover from the Haven: Cross-border Externalities of Patent Box Regimes within Multinational Firms

Schwab, Thomas and Todtenhaupt, Maximilian (2018) Spillover from the Haven: Cross-border Externalities of Patent Box Regimes within Multinational Firms. WU International Taxation Research Paper Series, 2016-07. WU Vienna University of Economics and Business, Universität Wien, Vienna.

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Abstract

We analyze the cross-border effect of tax cuts on R&D activity in the context of profit shifting. A tax cut in one location of a multinational enterprise reduces the user cost of capital for the whole group if profit shifting is possible and exerts a positive cross-border effect on R&D output. Using micro-level data, we find an increase of patent output of 15% upon the implementation of a foreign tax cut for firms with cross-border links. In addition, we find that foreign tax cuts prohibiting profit shifting generate a negative cross-border effect on average patent quality.

Item Type: Paper
Additional Information: Editors: Eva Eberhartinger, Michael Lang, Rupert Sausgruber and Martin Zagler (Vienna University of Economics and Business), and Erich Kirchler (University of Vienna)
Keywords: cross-border, taxation, innovation
Classification Codes: JEL F23, H25,O31
Depositing User: ePub Administrator
Date Deposited: 07 Nov 2016 13:53
Last Modified: 05 May 2018 00:24
URI: http://epub.wu.ac.at/id/eprint/5230

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